Microsoft Announces Significant Price Rises for Xbox Series X and S, 2TB Model Discontinued
Microsoft has announced significant price increases for its Xbox Series X and S consoles, citing the ongoing “components crisis” as the primary reason. In a recent blog post, the company confirmed that prices for the 512GB and 1TB models will go up by $100 and $150, respectively, starting August 1. Additionally, the 2TB version of the Xbox Series X will be discontinued, marking a notable shift in the console lineup.
Xbox Console Price Changes Effective August 1
The new pricing details are as follows:
- Xbox Series S 512GB: $399.99 → $499.99
- Xbox Series S 1TB: $449.99 → $599.99
- Xbox Series X 1TB Digital: $599.99 → $749.99
- Xbox Series X 1TB: $649.99 → $799.99
Microsoft mentioned that it had raised prices by $20–$70 in the U.S. last October, hoping to avoid further increases. However, the company now reports that storage and memory prices have risen by more than 2.5 times, and it expects another doubling by the fall of 2027. These rising costs are placing pressure on console manufacturers across the board.
Industry-Wide Components Crisis Affects Console Production
The components crisis is affecting the entire consumer electronics industry, but consoles are particularly vulnerable. Unlike smartphones, computers, or speakers, consoles are often sold at a loss or for a minimal profit. This makes it even more challenging for companies like Microsoft and Sony to absorb the rising costs of parts without passing them on to consumers.
In response to the price hikes, Microsoft has introduced several initiatives to help consumers. These include Buy Now, Pay Later options that allow users to split payments, as well as interest-free financing. Additionally, the company is working with retailers to offer second-hand consoles at lower prices. Microsoft also encourages users to trade in their old consoles for cash or store credit, which will then be resold at a reduced cost.
Certified Refurbished Consoles Offer Discounts
Microsoft Stores are offering Certified Refurbished Consoles for up to $100 off, providing an alternative for budget-conscious gamers. This move aims to make consoles more accessible while also helping to manage the increased production costs.
The timing of these price increases is notable, coming just before the release of GTA 6 in November. With the game expected to drive demand for both PS5 and Xbox Series X/S, concerns have been raised about whether either Sony or Microsoft can meet the anticipated demand. The AI boom is further complicating matters, as it makes it harder for hardware manufacturers to source components and maintain affordable pricing.
New Xbox CEO Calls for "Radically Different Business Models"
Earlier this month, new Xbox CEO Asha Sharma acknowledged the rising costs of consoles and suggested that the industry may need to adopt radically different business models for the next generation of hardware. She noted that it may become increasingly difficult to imagine mass audiences being able to afford new consoles that cost “thousands of dollars.”
This trend of price increases isn’t unique to Microsoft. Sony raised the price of PS5 consoles back in March, citing “continued pressures in the global economic landscape.” Nintendo has also not been immune, recently confirming it would increase the price of the Switch 2, just over a year after its release.
As the console market continues to evolve, these changes highlight the growing challenges faced by hardware manufacturers in maintaining affordability while dealing with rising component costs and increased demand.
